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Case number 14-1222 at L. HTH Corporation at L Petitioners versus National Labor Relations Board.

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Mr. Rand for the petitioners, Ms.

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Sheehy for the respondent.

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Good morning.

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May it please the court?

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My name is Richard Rand, and I represent the petitioners in this case, which is a rather unique case.

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We're here today because three members of the National Labor Relations Board, not at the request of any party and without notice to us and without giving us an opportunity to be heard, imposed extraordinary remedies, some of which are unprecedented.

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You put a file to motion.

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Is that not correct?

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We could have filed a motion for reconsideration.

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That would have been the only thing we could have done.

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So that was an opportunity to be heard.

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Well, we don't believe it is.

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And why not?

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First, the board's own regulation on reconsideration limits it to extraordinary circumstances.

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Well, you're arguing this is pretty extraordinary.

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I would agree our argument is very extraordinary.

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And then I would add so was the NRBs in this case for that matter.

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No, no, no.

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But your point was you had no opportunity to be heard by the board.

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We had no opportunity to be heard before they imposed these extraordinary remedies.

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And in fact, you did.

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That's all I'm getting at.

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You acknowledge that you could have filed a motion.

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There was nothing to prevent us from filing a motion for reconsideration other than our conclusion that it would have been futile.

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and futile because... Because all five members of the NLRB had weighed in on this subject.

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This is rather unique.

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I have never seen another case where all five members... I hadn't either.

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I thought that was interesting, that the five-member board came together.

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Now, two dissented in part, but I want to be clear, you argue

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this quasi due process argument.

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You never had an opportunity to be heard.

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To the extent you're suggesting that's a due process violation, why would it have been futile to raise that since the board had not previously addressed that?

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Well, again, because as we talked about, all five members had staked out their positions.

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So their minds are closed.

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Their minds are closed.

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And I think the suggestion that on a motion for reconsideration, which is for extraordinary circumstances, that they would have changed their mind based upon their precedent, because the three members relied upon the Camelot case, which came sort of in between our case.

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And they went through a very long dissertation trying to get around unbelievable.

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And the two dissenters said, you can't do that.

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This is really unbelievable, the case.

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And it's unbelievable in the result.

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So we thought it would have been futile.

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And we also believe that raising a due process argument to the agency, that's not where it should be raised.

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Because agencies really aren't tasked with protecting due process.

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Well, the board has an obligation to give people an opportunity to be heard.

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So it has that obligation.

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I just want to be clear about this.

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I'm not clear why you wouldn't, just as a matter of protection, have filed a motion for reconsideration, since you could have predicted the board was going to raise that as an objection to our jurisdiction, to even consider the merits of your argument.

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Well, you know, we weren't sure the board would, and I'll tell you the reasons why.

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Would what?

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Would erase this objection.

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I think they're doing it obviously because they don't want the merits to be considered.

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But I'll give you two reasons.

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They routinely, most agencies routinely raise

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an objection to our jurisdiction if they think there's a basis for it.

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And the court itself, my sua sponte, have to raise the question of its jurisdiction.

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Yes.

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And our responses are twofold.

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First,

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The extraordinary remedies that were imposed, which were the reading by Mr. Minicola and the broad cease and desist order, we did accept to those.

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And in our brief and supportive exceptions, we raised a very broad argument that we objected to any extraordinary remedies, and that's in the Joint Supplemental Appendix.

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We said this is not a case that warrants extraordinary remedies.

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And the board disagreed with you, so you had to tell them why.

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In fact,

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And you could have told them.

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We did tell them in our brief in support of our exceptions, Your Honor.

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What did you tell them?

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We told them that this is not a case based on the facts that warrants extraordinary remedies.

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But the board had already gone through the facts saying why it thought they did, so why didn't

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you have to tell them more than that.

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You disagreed with the board.

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Well, the way it was, this was our brief in support of exception to the administrative law judges' extraordinary remedies.

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Right.

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So then when the board comes out with even greater extraordinary remedies, our conclusion was they didn't listen to us the first time.

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They're not going to listen to us the second time.

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And let me also point out, and this is not in the briefs, but it's in the record, in the first case, HTH 1, which went to the Ninth Circuit,

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The administrative law judge recommended the payment of bargaining expenses.

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We accepted to that.

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And that went all the way up to the Ninth Circuit, and we argued it there.

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The board's argument is that we are a scofflaw, I guess, for lack of a better term, that we're recidivist.

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And you lost in the night, sir.

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We did lose in the night, sir.

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Yeah.

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Yes.

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But the board's argument is that we don't obey their orders.

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So there's no question that they would have known.

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We would have objected to any extraordinary rabbit.

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But my point is that the board's position was you're not your client, not only didn't obey board orders,

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ALJ orders, agreements it had entered into, the district court's injunctions.

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Don't you have to come forth and say something more than we disagree?

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Well, I think under the circumstances of this case, no.

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Again, we argued that.

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And I've tried to harmonize all of the 10E cases.

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And it's difficult because they are not consistent.

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And I think the courts take a somewhat pragmatic approach to 10E.

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And the ultimate question is, is the board on notice that you're going to disagree with the remedy?

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And there's no question that the board was on notice here that we disagreed with any extraordinary remedies.

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What is also interesting is if you look at the unbelievable case and if you look at the procedural history there, that was not a case where the administrative law judge ordered the remedy.

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What happened was after the record was closed, there were motions by the charging parties to assess the fees.

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And those were granted by the board.

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But I don't see, and I couldn't find because the case is so old, the procedural history, I don't find where in that case they'd be required to file a motion for reconsideration.

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I think the fact that they had objected in that case and had the opportunity to do so was enough.

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But I think there's also a more fundamental problem going on here.

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The board comes before this court and says, we have the inherent authority to award attorney's fees, not only to the charging parties, but to ourselves.

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And we have the inherent authority to award litigation expenses.

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And we have that authority because we're essentially an Article III court, and this is the bad faith exception.

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The problem with this- No, they don't quite say that.

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I'm sorry?

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They don't quite say they're an Article III court.

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Well, they- They claim to have, in this respect, the powers of an Article III court.

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Right.

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But if a federal district court, sua sponte, sanctioned either a litigant or an attorney,

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and did so and said, I'm just doing this, and here's my judgment, here's my order, and said that your only remedy is to file a motion for reconsideration under Rule 60 or appeal, I think we believe this court and every other circuit court would have grave difficulty with that procedure.

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because the Supreme Court, I think in the Chamber's case, talking about the inherent authority, said it's limited and we have to limit it because otherwise courts could abuse it.

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And in so doing, they said there are due process concerns.

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You have to have notice and an opportunity to be heard.

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This is the only case I know of

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where the NLRB not only responded, but without the request of any party, there were no exceptions, followed by counsel for the general counsel or the intervener to the ALJ's remedies, went off on its own and issued these remedies.

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And I think that is a very dangerous position for an agency to take, that we can do this to Wisponte.

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You don't get notice, and you don't get an opportunity.

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We heard, because the compliance proceeding, you don't get that opportunity.

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Compliance, they issue a specification, and the burden is on you to show what's wrong.

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That does not comply with due process.

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And we think, regardless of anything else,

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That is a fundamental flaw in what the NLRB did here, because we had no notice.

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We had been through a prior proceeding, and in that proceeding we had notice that they were going to seek litigation expenses.

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We accepted to that and we litigated that, and yes, we lost.

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So we're in the second case, and no one's asking for these expenses.

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No exceptions are filed.

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We do accept the extraordinary remedies.

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And then the NLRB turns around and, on its own, three years later, issues these remedies.

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Well, what I don't quite understand about this case is the first go around, you knew the board was going to impose what you have described to be an extraordinary remedy.

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You appeal that.

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Then the case went on, and it just got worse.

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And as a reasonable attorney, I'm going to suggest that you probably advise your clients that this was going to be a difficult row to hoe, given a decade and all the incidents that the board had elaborated.

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So I appreciate

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the arguments you're making about these are extraordinary but at least in your case your client knew that the board thought this was a very serious case and your client's conduct was so serious that an extraordinary bargaining expenses remedy was appropriate and the Ninth Circuit said that was a reasonable interpretation by the board of its authority and

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You have not accepted here to the factual findings by the board.

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So isn't that the end of that case, to the extent it's properly before us?

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Well, this is not an excuse, but I actually was not the attorney.

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I'm sorry.

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Then eliminate everything I said.

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I came in after, ironically, after the first case, after it was all said and done.

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I didn't mean to cast aspersions or praise, all right?

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Let's just take that off the table.

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But my only point is that your client is a knowledgeable

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participant in interstate commerce.

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It's been before the board.

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It would not surprise me at all to think that they would have had an inkling that the board might impose some serious remedies, as they had the first time.

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You're right.

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The first time they did, but again, we got notice of that.

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They did that in a typical counsel for the general counsel, sought that as a remedy.

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It was before the administrative law judge.

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We had a chance to be heard, and we had a chance to file exceptions.

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I do not believe, and again, I'm sorry, it wasn't counsel in HTH 1, that they sui sponte enhanced in order to need remedies.

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So it's nice to be prescient, but I don't think we could have predicted what happened in this case.

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I don't think anyone could have predicted what happened in this case.

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What about the fact that the board mentioned in its order the fact that it has done this type of thing in other cases?

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They haven't necessarily resulted in judicial decisions,

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It has imposed these types of remedies before.

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Well, they have.

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I mean, the bargaining expenses remedy is not something that's brand new.

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Awarding themselves litigation costs to a charging party, as far as I know, the only other case I've seen where they awarded themselves litigation costs was the unbelievable decision by this court, where the court said no.

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And one very significant point about unbelievable is in unbelievable, this court said that if you're looking at the party's history,

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then it's a punitive remedy, because you're punishing them for their past conduct.

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The NLME's brief to this court spends 10 pages talking about our history.

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And for them to stand in front of you and say, this is not punitive, this is compensatory.

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But the board's order, which is what we're looking at, addresses that.

[00:14:08] Speaker 02:
Well, the board tries to get very cute and says, this is compensatory.

[00:14:13] Speaker 04:
Well, cute.

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I mean, that's your view.

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Yes.

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It seems to me five members of the board thought this was a serious enough matter for their time and attention.

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You were unanimous on everything except attorney's fees, and then member Johnson talked about one other matter, and then there was this front pay.

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But that's really not before us.

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No, the front pay was them sort of teeing up for that.

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And I'm glad I don't have that issue before me.

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But yes, it was a serious matter.

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But my point, Your Honor, is that the bad faith exception is punitive.

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The Supreme Court said that in NASCO.

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And I think there's a footnote in that case where the petitioner tried to argue that attorney's fees are actually compensatory.

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And the Supreme Court said no.

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these are punitive.

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So regardless of what the board's characterization of that remedy is, these remedies are punitive.

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Whether you look at them in each one separately, if you look at them in whole, and that's what the dissent said.

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I mean, we have other remedies.

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The board didn't just stop there.

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They piled it on in this case, and it ordered remedies that really are extraordinary.

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And one thing every court has said is the board cannot be punitive.

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And at the end of the day, when you look at the remedies in this case, they are punitive.

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I mean, the payment of attorney's fees to the NLRB, no other agency has ever awarded itself attorney's fees.

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And there's a good reason why, because it's punitive.

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Counsel, can I make you on the shaming issue?

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Yes.

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As it comes out of the ALJ, we have

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an order that Minicola, Hayashi, or Watanabe read out this confession.

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And did you object?

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And then for its board, that is modified so that it's got to be either one of those or a board representative in the presence of one of those.

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ask for reconsideration by the board.

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But put aside that, are there any authorities that speak strongly against a remedy of a board official reading it, but a representative of the company should be on hand?

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There are, and my time is up, so I don't know if I'm going to be able to find them.

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But I know this court's approach has been that it is acceptable to have a company representative read it, an undesignated company representative.

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But I know there is authority, and I believe it is cited in our brief, that either singling out a particular representative in the circuit is unacceptable.

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And if you have the board agent read it,

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What it does is it gives the imprimatur that the board is no longer neutral but is on the side of the charging party.

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And I know there are cases and I believe they're cited in our brief that say that is over the line because you're essentially taking the board and you're removing them from being neutral.

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to being a partisan.

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And we did accept to that remedy.

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There's a discussion about the reading it, and that was clearly an exception we filed, and we did discuss that in our brief.

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I think the board... I don't think anybody could have accepted to the...

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the remedy of having a board representative read it with the company official merely a witness, because I thought the ALJ only required that the reader be one of these three company officials.

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We did accept to that, and we did discuss that.

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And again, I think when we accept to a notice reading remedy like that, and we say this case does not walk on any extraordinary remedies, the board is on notice that we are not going to agree to these type of remedies.

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And they clearly were on notice in this case.

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And I think these courts, the court's decisions, the local 780 case, even in the Alwin case, which we don't agree on the result,

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But the discussion there of 10E, I think, is very helpful and very instructive.

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10E has been interpreted somewhat pragmatically to give courts an opportunity to weigh in on these very important issues.

[00:18:42] Speaker 03:
Can I ask you a question, Mr. Rand, about a very minor point, and that is in these bargaining costs, reimbursing the union for, among other things, reasonable salaries.

[00:18:56] Speaker 03:
That strikes me as

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I know the board did the same thing in Fallbrook, but these union officials are going to be paid their salary, whether they're sitting at a negotiating table or not, and I don't know what reasonable salaries are either.

[00:19:16] Speaker 03:
Do you have any comment on that specifically?

[00:19:18] Speaker 02:
It is punitive.

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If we start with the basic proposition that the board's remedies must be compensatory and remedial, and not punitive, you are absolutely correct.

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The union did not lose a penny here.

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There's a lot of speculation, but the bottom line is that

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excuse me, the union business agents, they're paid a salary.

[00:19:39] Speaker 02:
You're right, whether they're sitting at a table with us, whether they're out organizing.

[00:19:42] Speaker 03:
I mean, is there anything in the record that they're paid more when they're negotiating or that someone had to sit in their office while they were at the negotiating table and had to be, I mean, there was some double payment or something?

[00:19:56] Speaker 02:
No, and the simple reason is that this was never asked for by anyone.

[00:20:00] Speaker 02:
So we never had a chance to develop that record.

[00:20:02] Speaker 04:
That's the kind of thing you could have raised in your motion for reconsideration, couldn't you?

[00:20:08] Speaker 04:
I'm quite serious about this.

[00:20:10] Speaker 04:
I didn't see anything in the record about that.

[00:20:12] Speaker 04:
And the board's position was this was a total waste of time of everybody when your clients refused to go along with the agreement they agreed to and the ALJ approved.

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I mean, it's a colossal waste of everybody's time.

[00:20:28] Speaker 04:
But your point is,

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that for reasons that Judge Henderson's questions were inquiring about, it's punitive and the board lacked authority, but you never...

[00:20:42] Speaker 04:
made that point in moving for reconsideration or exceptions.

[00:20:46] Speaker 02:
You're right.

[00:20:47] Speaker 04:
Or moving for reconsideration.

[00:20:48] Speaker 02:
You're absolutely right.

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And I think under the unique facts of this case, that would constitute extraordinary circumstances.

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Because 10E does have an exception.

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10E is not just you do it or else.

[00:21:00] Speaker 04:
I know.

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But the whole point is to let the board look at this.

[00:21:05] Speaker 04:
And you might well have gotten three votes

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to say, you know, these people are being paid.

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They don't double pay.

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That is a penalty.

[00:21:17] Speaker 04:
But the board never had a chance to respond to that.

[00:21:22] Speaker 04:
And we're sitting here, and we don't know the facts that are necessary to make any evaluation of this.

[00:21:29] Speaker 04:
Maybe the union's gone into bankruptcy as a result of this waste of time with your client.

[00:21:35] Speaker 04:
I mean, we don't just have any of that information.

[00:21:38] Speaker 04:
Who's the burden on there, though?

[00:21:40] Speaker 03:
The burden's on the board.

[00:21:41] Speaker 02:
The burden should be on the board.

[00:21:43] Speaker 04:
Right.

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But what is the nature of the burden if no one raises any objection?

[00:21:51] Speaker 02:
I think the board should be required to articulate and show to this court why these remedies are necessary and why they're compensatory.

[00:21:59] Speaker 02:
And they didn't do that.

[00:22:02] Speaker 04:
What do they have to do?

[00:22:03] Speaker 04:
Do they have to bring the union in and say, well, you spent 140 days on this case.

[00:22:09] Speaker 04:
If you hadn't had to spend 140 days, then you would have been able to spend more time negotiating in another context.

[00:22:18] Speaker 04:
I mean, is that what we're talking about?

[00:22:20] Speaker 04:
And if so,

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Why doesn't the board get a chance to address that?

[00:22:25] Speaker 02:
Well, the board chose not to address it.

[00:22:28] Speaker 02:
The board could have, when it got to them, it could have remanded this case for development of that factual record.

[00:22:35] Speaker 02:
Because one thing the board did that I haven't mentioned is there's three things the board can do.

[00:22:40] Speaker 02:
You can reconsider, you can reopen, or you can have a rehearing.

[00:22:44] Speaker 02:
The board did something kind of interesting here.

[00:22:47] Speaker 02:
We opened the record just for them to note that we actually did have a collective bargaining agreement.

[00:22:53] Speaker 02:
Now, they didn't give notice to anybody.

[00:22:55] Speaker 02:
They didn't allow us to develop the record.

[00:22:57] Speaker 02:
But I think the board here has the burden to come in and say there's actually a harm, there's an injury that we're going to remedy that these are compensatory, and they didn't do that.

[00:23:06] Speaker 04:
Well, their view is different and I understand that.

[00:23:09] Speaker 04:
Their view is they're trying to put people back where they would have been had your client's conduct not in the board's unanimous view gone to the very core of the board's operation and just put one obstacle in its way after another.

[00:23:32] Speaker 04:
That's the board's view.

[00:23:33] Speaker 04:
Now maybe they're wrong about that in terms of

[00:23:37] Speaker 04:
Theoretically, they may be right, but the effect is punitive.

[00:23:42] Speaker 04:
But they never had a chance to address that.

[00:23:45] Speaker 04:
You're right, but... And we don't know what they might have said.

[00:23:48] Speaker 02:
You're right, and all it is is speculation based upon the position of the three board members.

[00:23:54] Speaker 02:
But the problem with a remedy like that is bargaining can be a very long process because of both sides.

[00:23:59] Speaker 02:
Both sides, you have mandatory subjects.

[00:24:02] Speaker 02:
You're allowed to insist and pass upon them.

[00:24:04] Speaker 02:
And it's very easy to blame the employer because the employer took different positions.

[00:24:09] Speaker 02:
But there's no discussion of the union's behavior and whether any of its positions

[00:24:13] Speaker 02:
were very difficult, and they insisted impasse on things that were unacceptable to the employer.

[00:24:18] Speaker 04:
Well, was that brought to the board's attention?

[00:24:20] Speaker 02:
No, because they never asked.

[00:24:22] Speaker 04:
Well, motion for reconsideration.

[00:24:25] Speaker 04:
Make it clear, you know?

[00:24:26] Speaker 04:
I mean, that's all I'm getting at.

[00:24:29] Speaker 02:
Judge, I can't stand in front of you and say I found one, right?

[00:24:33] Speaker 02:
But I think our exceptions to the board, coupled with this court's pragmatic approach and the extraordinary circumstances exception, give this court jurisdiction over all of our issues, and we would ask that they reverse.

[00:24:48] Speaker 02:
All right.

[00:24:48] Speaker 02:
Thank you.

[00:24:48] Speaker 03:
We'll give you some time in response.

[00:24:51] Speaker 03:
Ms.

[00:24:52] Speaker 03:
Sheehy.

[00:25:04] Speaker 05:
Good morning, Your Honors.

[00:25:05] Speaker 05:
Barbara Sheehy for the National Labor Relations Board.

[00:25:10] Speaker 05:
I'll start first with, there's a number of issues in play, but I think there's the one that the board briefs that would dispose of everything, which is the position that all of the sua sponte remedies were waived

[00:25:21] Speaker 05:
by HTH by its failure to file a motion for reconsideration after the board acted.

[00:25:27] Speaker 04:
Well, counsel's point is, you know, piling on these are not normal remedies.

[00:25:33] Speaker 04:
This is just punitive.

[00:25:36] Speaker 04:
And that's an extraordinary situation.

[00:25:38] Speaker 04:
And, you know, Kenny allows for that.

[00:25:42] Speaker 05:
I don't know that the number of violations, I'm sorry, I don't know that the number of remedies imposed is actually all that extraordinary given that it tracks the way to the evidence, that you had an extraordinary number of violations that needed to be remedied.

[00:25:57] Speaker 05:
So I don't think we can look strictly to the number of what happened here and say, well, that must be extraordinary.

[00:26:02] Speaker 05:
And I think what the big problem, I think, and it's been touched on a number of different questions and answers here, is that the board, certain of the remedies, certainly there was a very thorough discussion among the five board members.

[00:26:18] Speaker 05:
Although I would note that this court has said the discussion itself is not sufficient to a court jurisdiction.

[00:26:24] Speaker 05:
That notwithstanding, certainly there was a lot of discussion, as I said, on the attorney's fee issue, predominantly the attorney's fee issue, and then also to a lesser extent the negotiating expenses, but not to the extent that they were objected to.

[00:26:38] Speaker 05:
So let's be very clear who dissented and on what grounds.

[00:26:41] Speaker 05:
The only real dissent we have where there is all of these issues out there is the attorney's fees.

[00:26:48] Speaker 05:
Beyond that, we don't have a dissent from Johnson or members Johnson or Ms.

[00:26:53] Speaker 05:
Amara on whether or not negotiating expenses were appropriate.

[00:26:58] Speaker 05:
There's the issue of the non-bargaining costs that the two of the members objected to, but the negotiating expenses themselves.

[00:27:07] Speaker 05:
So to your point, Judge Henderson, that's an excellent question on what exactly a reasonable salary, what does that mean in terms of

[00:27:13] Speaker 05:
how do you implement that was on the part of that, b

[00:27:20] Speaker 05:
Once that order is imposed, to seek clarification from the board, what do you mean by reasonable attorney's fees?

[00:27:26] Speaker 05:
We can show that these business agents are getting doubly paid.

[00:27:29] Speaker 05:
That's a wonderful basis for a motion for reconsideration and drawing that information to the board's attention.

[00:27:35] Speaker 05:
Failure to do that.

[00:27:36] Speaker 01:
Camelot had been decided at the time of this, right?

[00:27:40] Speaker 05:
Camelot had been decided.

[00:27:41] Speaker 05:
And on top of that, you also had HTH.

[00:27:44] Speaker 01:
Doesn't that suggest possible futility for HTH?

[00:27:49] Speaker 05:
futility for all of its claims, or?

[00:27:52] Speaker 01:
Well, certainly for the measure relating to bargaining and litigation costs.

[00:28:00] Speaker 05:
Respectfully, no, I don't think it shows that it's futile.

[00:28:03] Speaker 05:
Let's do the bargaining cost first, because I think that's an easier issue.

[00:28:08] Speaker 05:
I think that this employer, I think, did have an obligation.

[00:28:12] Speaker 05:
If they wanted to object to say that we didn't understand that our conduct infected the core of bargaining, you don't have a dissent from members of Johnson or Miskimara or any of the other three.

[00:28:21] Speaker 05:
You have a 5-0 decision in that respect.

[00:28:23] Speaker 01:
That suggests even more futility.

[00:28:25] Speaker 05:
Or it's suggesting that they didn't offer any argument for anybody to consider, that the board was left with the evidence as it was and said, this conduct is no different than what you did in the 2010 series of cases that culminated also in negotiating expenses.

[00:28:41] Speaker 05:
So while the burden is certainly on the board.

[00:28:43] Speaker 01:
I don't think you're hearing me.

[00:28:45] Speaker 01:
Suggesting that they, on the record as it was presented, given the context of the board's decisions, it was futile.

[00:28:55] Speaker 01:
And I just don't think that it's- You seem to be underscoring that.

[00:28:58] Speaker 01:
Well, no, I think that it's a dangerous- You're saying those people, there's loads of reasons they would have lost.

[00:29:02] Speaker 05:
No, I don't mean to do that.

[00:29:04] Speaker 05:
I just mean to say I think it's a dangerous idea to say that an employer is excused from challenging a remedy that's imposed against it because it's a really bad employer and the board really found a lot of violations against it.

[00:29:16] Speaker 01:
Well, you formulated it that way.

[00:29:17] Speaker 01:
But another way is to say that there was a very recent board precedent dead against it.

[00:29:25] Speaker 05:
The Camelot wasn't new.

[00:29:28] Speaker 05:
Camelot wasn't new law.

[00:29:29] Speaker 05:
Frontiers existed on Barney.

[00:29:31] Speaker 01:
I think I said recent.

[00:29:33] Speaker 01:
It was recent, right?

[00:29:34] Speaker 01:
Certainly.

[00:29:34] Speaker 01:
It was recent.

[00:29:35] Speaker 01:
Absolutely.

[00:29:36] Speaker 01:
It's not as if there's any indication the board was likely to change its mind between Camelot and HTH.

[00:29:44] Speaker 05:
It's not that it needed to change its mind.

[00:29:47] Speaker 05:
It's that they applied the precedent.

[00:29:49] Speaker 05:
They applied what the law is for the behavior.

[00:29:52] Speaker 01:
That's right.

[00:29:53] Speaker 01:
That suggests that a decision for reconsideration would have been futile.

[00:29:59] Speaker 01:
You don't respond to that proposition.

[00:30:02] Speaker 01:
You just keep saying HCH was really bad.

[00:30:05] Speaker 05:
I don't think it would have been futile necessarily.

[00:30:08] Speaker 05:
I don't know that an adverse case with a similarly egregious employer that preceded you by two or three years, I don't know.

[00:30:17] Speaker 05:
that that's sufficient to say, I don't have to lodge any, I don't have to tell the board anything about anything I objected to in its decision, because it would have been futile.

[00:30:27] Speaker 05:
Because here's part of the problem with that.

[00:30:29] Speaker 05:
Futility.

[00:30:31] Speaker 05:
For what reason is it futile?

[00:30:32] Speaker 05:
For what reason is the board's decision infirm?

[00:30:35] Speaker 05:
And part of the problem we have here, for instance, and I'll shift gears a little bit to the attorney's fee.

[00:30:39] Speaker 05:
You heard opposing counsel stand up and talk a lot about the punitive nature, and that's why the attorney, the argument that the attorney's fees are inappropriate because they're punitive.

[00:30:48] Speaker 05:
They not only don't raise that in a motion for reconsideration, we all know, they don't even have that in their brief to this court.

[00:30:54] Speaker 05:
That's in Camelot's brief.

[00:30:56] Speaker 05:
So it's a very moving target.

[00:30:58] Speaker 05:
And I think that that's just indicative of what this litigation has been.

[00:31:01] Speaker 05:
It's just been any time the board in this case imposed a remedy, they objected and they said, we just object to anything that you do, and that should be sufficient because

[00:31:11] Speaker 05:
because we would have been futile.

[00:31:13] Speaker 05:
And I don't know that under 10E law, that futility under those circumstances justifies the extraordinary circumstances.

[00:31:21] Speaker 05:
In fact, this court in Alwin said that extraordinary circumstances were not present when somebody failed to object to the imposition of attorney's fees.

[00:31:31] Speaker 05:
This court has also said in subsequent cases that the discussion among board members is not sufficient.

[00:31:37] Speaker 05:
The only case that I'm aware of that speaks to the futility of a 10e argument, and we talk about this in the brief, is the Fifth Circuit case.

[00:31:45] Speaker 05:
But I think that was an, not only, it wasn't just a pure issue of futility that granted that the court there rather invoked its jurisdiction, it also considered the fact that in that case,

[00:31:56] Speaker 05:
The board wasn't even trying to invoke 10E.

[00:32:00] Speaker 05:
The board was not seeking to prevent the argument from being made.

[00:32:03] Speaker 05:
It was the intervener.

[00:32:04] Speaker 05:
And the Fifth Circuit, in that case, spoke to futility and the use of 10E as a sword for an intervener, and that wasn't its purpose.

[00:32:12] Speaker 05:
So I don't know that this court's jurisprudence supports an argument of futility.

[00:32:22] Speaker 05:
And I wanted to, let's see, I wanted to also speak to

[00:32:27] Speaker 05:
The argument that this is and I think it's sort of touched on this But I just want to be clear on it that this is not the only case of litigation expenses So to the extent there's also the argument that they weren't on notice or they didn't have an opportunity to be heard Setting aside the issue if they had every opportunity if they had just availed themselves the board practices and filed a motion for reconsideration they were also on notice of the board's

[00:32:52] Speaker 05:
standards for imposing various remedies.

[00:32:55] Speaker 05:
Indeed, this employer is perhaps on better notice than others because it's had extraordinary remedies imposed against it.

[00:33:00] Speaker 05:
But specific to the attorney's fees, on page three of the decision and order, and I'm sorry, I don't have my appendix, I just have the DNO, but there's a listing of cases that the board relies on for litigation, and that's not even an exhaustive list.

[00:33:13] Speaker 05:
So it's simply inaccurate to say that this is one of the first times that the board, outside of unbelievable, that the board has imposed litigation expenses.

[00:33:21] Speaker 04:
It's simply not true.

[00:33:22] Speaker 04:
What about the argument that to the extent the board is relying on the bad faith exception to the American rule, that in light of the Supreme Court's decision,

[00:33:40] Speaker 04:
attorney's fees imposed under that exception are punitive.

[00:33:50] Speaker 05:
What's the board's position on that?

[00:33:52] Speaker 05:
I'll answer that.

[00:33:54] Speaker 05:
Before I do, I just want to note that that's not something that they argue.

[00:33:57] Speaker 05:
It wasn't before the court.

[00:33:58] Speaker 05:
It's not even in their brief.

[00:33:59] Speaker 04:
I know.

[00:33:59] Speaker 04:
I thought it was an interesting point at oral argument.

[00:34:03] Speaker 05:
But that now is standing.

[00:34:04] Speaker 05:
I'm obviously not going to dodge based on that.

[00:34:07] Speaker 05:
But we put this in our book.

[00:34:09] Speaker 05:
in the second case, in the Camelot brief, we speak to the issue of, yes, the Supreme Court, when it was spoke about the bad faith exception in Hall, said it's punitive.

[00:34:21] Speaker 05:
But then I think what you see later, so first, that's not in the context of somebody examining whether or not

[00:34:28] Speaker 05:
an action is punitive for purposes of stepping outside the bounds of the board's authority, which I think is a relevant distinction.

[00:34:35] Speaker 05:
The court can use a term to say something is punitive without necessarily saying, in the context of what we're saying here, is that is it punitive to the extent that it exceeds the board's authority and it is stepping over remedial and deterrent grounds.

[00:34:50] Speaker 05:
So there's that first.

[00:34:51] Speaker 01:
And then I would- You raise an interesting question.

[00:34:54] Speaker 01:
What do you see as the function of the Chambers case?

[00:35:01] Speaker 01:
Repetition several times of the proposition that awarded fees on the basis of bad faith was punitive.

[00:35:09] Speaker 05:
I think actually chambers helps us.

[00:35:11] Speaker 05:
I think it helps the board's position here that it's not punitive.

[00:35:14] Speaker 05:
Because in chambers, what they find, because there's the offender in that case trying to get out from underneath liability for the damages, relying on state law to say that these damages for shifting of the fees is punitive.

[00:35:29] Speaker 05:
And under state law, you can't impose punitive damages.

[00:35:32] Speaker 05:
So the Supreme Court in that case said, not so fast, even under state law, we're going to find, I'm sorry, under our jurisprudence, we're going to find that the- Right, I thought it said state law has nothing to do with that, right?

[00:35:45] Speaker 05:
But they found that it was not punitive because the Chambers Court does say that.

[00:35:49] Speaker 05:
Chambers Court speaks to, and we cite this in our brief, it's page 2138.

[00:35:54] Speaker 05:
I'm sorry, I got the wrong, that's what the Westlaw cites, sorry, page 54.

[00:36:02] Speaker 05:
The chamber's court speaks to the substantive state policies not implicated here, where the sanctions imposed were for the conduct during the litigation.

[00:36:14] Speaker 05:
Here, the district court did not attempt to sanction the petitioner for breach of conduct, but rather impose sanctions for the fraud he perpetrated on the court and the bad faith he displayed toward both his adversary and the court throughout the litigation.

[00:36:27] Speaker 05:
So our reading of that is that.

[00:36:29] Speaker 05:
I'm sorry, where are we?

[00:36:30] Speaker 05:
Sorry, that's on page 54 and 55 of Chambers.

[00:36:34] Speaker 05:
Oh, I can cite to you in our brief, too.

[00:36:36] Speaker 05:
That would help you.

[00:36:37] Speaker 01:
Yeah, that would help.

[00:36:38] Speaker 01:
Yeah.

[00:36:38] Speaker 01:
As you said, you were citing the brief.

[00:36:40] Speaker 05:
Sorry, I thought you wanted Chambers.

[00:36:44] Speaker 05:
Oh, you know what?

[00:36:46] Speaker 04:
It's going to be in there.

[00:36:50] Speaker 05:
It's going to be in the Camelot brief, I believe.

[00:36:52] Speaker 05:
Because again, they didn't argue punitive in this case.

[00:36:56] Speaker 05:
We naturally didn't address it, but Chambers is in the subsequent brief.

[00:37:05] Speaker 05:
Let's see.

[00:37:25] Speaker 05:
It starts on page 32 of the board's brief in the subsequent pace in Camelot.

[00:37:32] Speaker 05:
So our view of that is that Chambers actually speaks to, it's not punitive, the damages aren't punitive if they're not going to the underlying conduct, which I think begs the question, right?

[00:37:42] Speaker 05:
Like here is the board's remedy going to the underlying conduct.

[00:37:46] Speaker 05:
And I think the best thing to do is to look at what was the conduct that was found to be sufficient to warrant fees

[00:37:55] Speaker 05:
in chambers, because our view of the Supreme Court's decision there was that it was not punitive.

[00:38:02] Speaker 05:
And in that case, if you look at the conduct, it's remarkably similar to the conduct here.

[00:38:07] Speaker 05:
So it didn't go to the underlying breach of contract claim.

[00:38:10] Speaker 05:
It went to what was the offender's conduct before the tribunal in that case.

[00:38:16] Speaker 05:
And if that conduct was in bad faith,

[00:38:20] Speaker 05:
then fees are OK in that instance because they weren't punitive.

[00:38:23] Speaker 05:
So they weren't precluded by the state statute in that case.

[00:38:26] Speaker 05:
And there, specifically, the conduct was there was a false and frivolous pleadings.

[00:38:31] Speaker 05:
There was fraud.

[00:38:32] Speaker 05:
There was attempt by other tactics of delay, oppression, harassment, and massive expense to reduce NASCO to exhausted compliance.

[00:38:40] Speaker 05:
So we would argue that the conduct here and that the reason that the board imposed the fees was for the conduct in litigation.

[00:38:48] Speaker 05:
which again our view and page 32, 33 of the brief is that the Supreme Court has found that that by its nature is not necessarily punitive.

[00:39:12] Speaker 05:
And then I only have one other thing, unless the court has any other questions on the other.

[00:39:16] Speaker 05:
Oh, could you speak to the shaming remedy?

[00:39:19] Speaker 01:
That's where I was going to go.

[00:39:20] Speaker 01:
You were very firm in your brief that we can't consider, at least as I understood it, anything that happened after the ALJ, to whose order there was a proper objection.

[00:39:32] Speaker 01:
So to the extent that the board, in my view, softened the order, we should disregard that?

[00:39:43] Speaker 05:
I'm sorry, ask that question again, I'm sorry.

[00:39:45] Speaker 05:
We don't object, maybe it's not clear in the brief.

[00:39:48] Speaker 05:
There are two parts of the remedy that the board does not try to invoke a 10E jurisdiction.

[00:39:54] Speaker 05:
It may not be clear in the brief, and that's because we recognize that they did in part preserve part of that.

[00:39:59] Speaker 05:
So we don't have a 10E claim on the public reading.

[00:40:02] Speaker 01:
Public reading by the company officials.

[00:40:05] Speaker 05:
By the company officials, right.

[00:40:06] Speaker 05:
We have a claim that the board, our response to their claim is not that it's jurisdictionally barred, but that it's completely adverse to this court's precedent on when it's appropriate to do a public read.

[00:40:18] Speaker 01:
But you don't argue, do you, that the objection to the company officials reading claim is moot?

[00:40:27] Speaker 01:
Right, because the board's order frames it in the alternative with the, to me at least, less questionable order.

[00:40:41] Speaker 01:
Right, I think the board's trying to cure.

[00:40:42] Speaker 01:
Being an option of the company to have somebody there while a board official reads it.

[00:40:50] Speaker 05:
Right, and I don't think the board did anything unique here.

[00:40:52] Speaker 05:
I think they took the administrative law judge's decision, realized that by designating an official who will read that notice, that that's not proper under the law.

[00:41:01] Speaker 05:
So they made a minor tweet to that and said, put in the or language, or a board official, which brings it squarely within the confines of this court's law, saying that that's proper.

[00:41:11] Speaker 01:
So you are invoking that defense of,

[00:41:15] Speaker 05:
Not a tenee defense, no.

[00:41:17] Speaker 05:
I know there's so many defenses.

[00:41:20] Speaker 01:
That defense of the outcome.

[00:41:24] Speaker 05:
Yes, we are defending the outcome of the board's modification.

[00:41:28] Speaker 01:
On the basis that it ameliorated the order.

[00:41:31] Speaker 05:
Absolutely.

[00:41:31] Speaker 05:
Sorry for any confusion on that, yes.

[00:41:34] Speaker 05:
And that was actually the last point that I was going to try to get to.

[00:41:37] Speaker 05:
So unless the court has any other questions on the other remedies or the other issues,

[00:41:44] Speaker 05:
Thank you.

[00:41:44] Speaker 05:
Thank you.

[00:41:44] Speaker 05:
And obviously, if you're seeking full enforcement of the court's order.

[00:41:50] Speaker 03:
Why don't you take a couple minutes, Mr. Ray.

[00:41:52] Speaker 03:
Thank you.

[00:41:54] Speaker 02:
Let me address the chambers issue, because I have chambers.

[00:41:59] Speaker 02:
And I would point to the court, 501 US at 53, where the court says, has chambers recognized

[00:42:07] Speaker 02:
The case of the bad faith exception to the American rule, the underlying rationale of fee shifting is, of course, punitive.

[00:42:14] Speaker 02:
And there's also a footnote where they rejected their attempt to try to label it as compensatory.

[00:42:19] Speaker 02:
Fee shifting, under the bad faith exception, which is what the board did here, is clearly punitive.

[00:42:24] Speaker 02:
And that is beyond the board's statutory authority.

[00:42:27] Speaker 02:
We did argue that the board's remedies must be remedial in nature and cannot exceed that.

[00:42:32] Speaker 02:
And of course, the board went well beyond that here.

[00:42:35] Speaker 02:
And it is also ultra-various because the board simply does not have that inherent authority.

[00:42:41] Speaker 02:
What's interesting is the board in its brief does not cite a decision from another agency, not a single other agency,

[00:42:47] Speaker 02:
has imposed the kind of fees that the board has.

[00:42:49] Speaker 02:
It's one thing to sanction litigants in front of you, and we understand that, but it's another thing.

[00:42:54] Speaker 02:
And in fact, the board has a rule.

[00:42:56] Speaker 02:
They have an administrative rule that talks about misconduct of attorneys in front of it and how they deal with that.

[00:43:02] Speaker 02:
They didn't invoke that in this case.

[00:43:04] Speaker 02:
Instead, they're saying it's inherent authority.

[00:43:06] Speaker 02:
One other last point, Your Honors, is nowhere in the board's brief do they show you cases where the board has invoked the extraordinary circumstances exception on motions for reconsideration and actually reconsidered a decision where all five members of the board have weighed in and have changed their mind.

[00:43:26] Speaker 02:
So we think in this case, it absolutely would have been futile.

[00:43:30] Speaker 02:
Thank you very much.

[00:43:31] Speaker 03:
All right, thank you.